2024 Code of Alabama
Title 10A - Alabama Business and Nonprofit Entities Code.
Chapter 1 - General Provisions.
Article 6 - Indemnification and Insurance.
Division C - Permissive Indemnification and Advancement of Expenses.
Section 10A-1-6.23 - Manner for Determining Permissive Indemnification.

Universal Citation:
AL Code § 10A-1-6.23 (2024)
Learn more This media-neutral citation is based on the American Association of Law Libraries Universal Citation Guide and is not necessarily the official citation.

Section 10A-1-6.23

Manner for Determining Permissive Indemnification.

(a) Except as otherwise provided by subsections (b) and (c), the determinations required under Section 10A-1-6.21(a) must be made by:

(1) a majority vote of a quorum composed of the governing persons who at the time of the vote are disinterested and independent;

(2) if a quorum described by subsection (a)(1) cannot be obtained, a majority vote of a committee of the board of directors of the enterprise designated to act in the matter by a majority vote of the governing persons and composed of at least one governing person who at the time of the vote is disinterested and independent;

(3) special legal counsel selected by the board of directors of the enterprise, or selected by a committee of the board of directors, by vote in accordance with subdivision (1) or subdivision (2) or, if a quorum described by subdivision (1) cannot be obtained and a committee described by subdivision (2) cannot be established, by a majority vote of the governing persons of the enterprise;

(4) a majority of the membership interests that are entitled to vote on the transactions by virtue of not being owned by or under control of the governing persons constitutes a quorum for purposes of taking action under this section; or

(5) a unanimous vote of the owners or members of the enterprise.

(b) If special legal counsel determines under subsection (a)(3) that a person meets the standard under Section 10A-1-6.21(a)(1), the special legal counsel shall determine whether the amount of expenses is reasonable under Section 10A-1-6.21(a)(2) but may not determine whether indemnification should be paid under Section 10A-1-6.21(a)(3). The determination whether indemnification should be paid must be made in a manner specified by subsection (a)(1), (2), (4), or (5).

(c) A provision contained in the governing documents of the enterprise, a resolution of the owners, members, or governing authority, or an agreement that requires the indemnification of a person who meets the standard under Section 10A-1-6.21(a)(1) constitutes a determination under Section 10A-1-6.21(a)(3) that indemnification should be paid even though the provision may not have been adopted or authorized in the same manner as the determinations required under Section 10A-1-6.21(a). The determinations required under Section 10A-1-6.21(a)(1) and (2) must be made in a manner provided by subsection (a).

(Act 2009-513, p. 967, §52.)

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